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IPR: Patent pools and competition law

In today’s era of modernisation, both intellectual property rights (IPR) and competition law are crucially relevant. It is often said that IPR and competition law are contrary to each other however this might not be the reality as the primary aim of both IPR and competition law is the accumulation of wealth. Patent pools can be understood as “the agreement between two or more patent owners to licence one or more of their patents to one another or the third party.” A single technological advancement is often an amalgamation of various patented technologies. So in order to prevent multiple infringement suits and efficiently obtain licences, patent pools are created. They are also employed to reduce costs related to research and technology. Looking back, the first patent can be dated to 1856 for the sewing machine. A patent pool has been said to be helpful in getting rid of patent thickets (overlapping of patents) which increase the overall licensing costs. Despite its positive ramifications, patent pools can encourage anti-competitive activities at times.

Legal Framework related to Patent Pooling in India


India being a developing nation, is new to the world of intellectual property. But in recent years awareness regarding IPR has increased multifold. This also increases the risk of patent thickets which contribute to the rise of licensing costs. Patent pools can be an efficient solution here. Under the Patent act 1970, there is no specific provision dealing with patent pools. However, § 102 of the Act aids in the creation of patent pools. One impediment to patent pools in India is the Competition act 2002 which restricts anti-competitive activities.

Patent Pools: Pro-competition or Anti-competition?

Pro-competitive effects
The efficiency of patent pools is a very important consideration. The optimal generation of goods and services can be eased by creating patent pools.
Patent pools can be helpful in minimising or eliminating patent-related lawsuits because such disputes can be easily addressed or avoided by creating a patent pool. Patent related lawsuits when minimised would save time and money while also avoiding the uncertainty about patent-related rights. Small and medium-sized business entities, specifically, profit from this because they cannot usually afford the costs relating to such disputes.
Another pertinent boon of patent pools is that they permit licensing for technology that is jointly owned by multiple companies. Thus, patent pools can lower transaction costs as well because licensees only need to engage in one licensing deal with one patent pool.
When patents are mutually blocked or when one patent infringes on another, a patent pool may be an economical way to clear blocking patents. Clearing obstructing patients can result in the speedier development of some technologies.

Anti-competitive concerns
Some competitive concerns are directly related to the creation of patent pools. Patent pools that consist of replacement patents have a negative impact on competition since the rivalry between two alternative patents is likely to be reduced if these patents are pooled.
The patent pool’s licensing process is a significant factor. Patent pools with wide licensing arrangements are troublesome in terms of competitiveness. If members of the patent pool are not permitted to independently licence the patents covered by the pool, the pool may charge a price higher than the competitive rate. As a consequence, patent pools that limit licensing will often raise competition issues.
Furthermore, patent pools, like any other type of collaboration among competitors, can facilitate possible collusion, for example, by offering a venue for its members to communicate competitively sensitive data, such as price, marketing tactics, or R&D information.

Conclusion

Cooperation among patent holders of related technologies can result in major technological and economic efficiencies. It is critical to guarantee that the convergence of both the IP and competition regimes benefits the economy, which is the overarching goal shared by both systems in question.

By Devanshi Shukla